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Economic Fantasyland (Vol. 103)

Updated: May 31, 2023

Has the whole world gone mad?


While we wrangle over the debt ceiling, with all the politicians pointing fingers at the other side trying to figure out ‘Who shot John’, the much bigger picture is clearly being missed.


The politicians are trying to score political points, and yes, the white night will appear to save the day as the damsel in distress gets rescued at the last minute (I hope). But saving the day today is not the critical issue, it is our future that is the critical issue, and NO ONE will address it.


Here is an excerpt from The Economist article from May 4, 2023:


"The political point-scoring also misses a bigger and more enduring problem. America’s budget deficit is set to balloon as its population ages, the cost of handouts swells and the government’s interest bill rises. We estimate that deficits could reach around 7% of gdp a year by the end of this decade—shortfalls America has not seen outside of wars and economic slumps. Worryingly, no one has a sensible plan to shrink them.

Governments elsewhere face similar pressures—and appear just as oblivious. Those in Europe are locked in a silly debate about how to tweak debt rules, at a time when the European Central Bank is indirectly propping up the finances of its weakest members. China’s official debt figures purport to be healthy even as the central government prepares to bail out a province. Governments are stuck in a fiscal fantasyland, and they must find a way out before disaster strikes."


Later, it goes on to say:


"Politicians need to get real, fast. Public debts are in danger of becoming unmanageable, especially if interest rates stay high. Every step up in borrowing hampers governments’ ability to respond to the next crisis. And there are limits to how far spending can be controlled. Politicians could dial down their promises to pensioners or ensure that their role in the green transition is not larger than it needs to be. But there is little public appetite for austerity, and spending is bound to rise as populations age. More defense spending and green investment are essential."


Has the whole world lost its mind? Can the world continue down this path forever with impunity? I think not, no, I KNOW not.



BOTTOM LINE

Fellow Americans, Wake up before it is too late. We citizens must grasp the issues and demand our politicians fix the fiscal insanity before we slam into the proverbial iceberg and sink.


Make no mistake about this, we ARE headed for the iceberg if we maintain the present course we are on. Don’t let that happen on our watch.


LEARN ECONOMICS, THEN VOTE SMART

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